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Chip wars: China, America and silicon supremacy


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Oct 16, 2018
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From The Economist
"The trade conflict that matters most between America and China is a 21st-century fight over technology. It covers everything from artificial intelligence (ai) to network equipment. The fundamental battleground is in semiconductors. The chip industry is where America’s industrial leadership and China’s superpower ambitions clash most directly. And whatever Messrs Trump and Xi say at the g20, this conflict will outlast them both.

That is because computer chips are the foundations of the digital economy and national security. Cars have become computers on wheels. Banks are computers that move money. Armies fight with silicon as well as steel (see article). Firms from America and its allies, such as South Korea and Taiwan, dominate the most advanced areas of the industry. China, by contrast, remains reliant on the outside world for supplies of high-end chips. It spends more on semiconductor imports than it does on oil. The list of the top 15 semiconductor firms by sales does not contain a single Chinese name.

Well before Mr Trump arrived on the scene, China made plain its intention to catch up. In 2014 the government in Beijing announced a 1trn yuan ($150bn) investment fund to improve its domestic industry. Semiconductors feature prominently in “Made in China 2025”, a national development plan issued in 2015.

China’s ambitions to create a cutting-edge industry worried Mr Trump’s predecessor. Barack Obama blocked Intel from selling some of its whizziest chips to China in 2015, and stymied the acquisition of a German chipmaker by a Chinese firm in 2016. A White House report before he left office recommended taking action against Chinese subsidies and forced technology transfer. Other countries are alarmed, too. Taiwan and South Korea have policies to stop purchases of domestic chip firms by Chinese ones and to dam flows of intellectual property."
The US has legitimate concerns about the national-security implications of being dependent on Chinese chips and vulnerable to Chinese hacking. Just recently, there was also news about how China used a tiny chip to infiltrate American companies. I just do not know if the steps the US is taking is enough to secure the data of everyone from other countries. Remember that it's not only user data but it may also include government and corporate information.
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